Probate – Probate Avoidance – Estate Taxes

Probate is required if there is no other way to transfer an asset to the heirs of an estate.

California law requires probate for anyone who dies with assets, in order to ensure that the person with priority (according to California law) receives the assets.A probate is required if that person owns assets in excess of a certain dollar amount or if no other designation was made for the transfer of the asset (such as a POD, TOD or beneficiary).

The California Probate Code provides the laws and procedures for the probate proceedings which begins with the filing of a Petition for Probate in the California Superior Court in the County where the person resided and / or died.

The Court will appoint an Executor (if there is a Will) or an Administrator / Personal Representative (if no Will is located) to gather the assets of the estate, pay the debts of the estate, and then distribute the balance to the heirs or beneficiaries. The Executor / Administrator is required to notify all of the estate’s creditors about the probate so that if there is any debt owing, a Creditors’ Claim can be filed. An inventory of the assets, and an accounting of the assets must be filed at various times with the Court.

On average, the probate process can take between 6 to 12 months. However, other complications can cause the process to take much longer. For example, if the Will is contested, or the deceased did not keep or maintain good records of the assets, then more time is required in order to locate, manage and obtain a Court order to distribute those assets.

Probate Avoidance:

In California,there are certain procedures that allows one to avoid the probate of an estate. If the person who has died (the decedent) has taken other steps or made other arrangements for the distribution of the assets, then a probate may not be necessary. Such methods include:

A LIVING TRUST where the assets are placed “in trust” and a Trustee is appointed to care for and / or distribute the assets

Retirement Accounts / 401(k), IRA, etc. / Life Insurance: if a person (and not the estate) is properly named as a beneficiary

Bank accounts / Securities: if one designates an account as a POD (payable on death) or TOD (transfer on death) with a certain individual to receive the funds upon the death of the owner, or a jointly owned account where the surviving co-owner will automatically become the sole owner.

Summary probate: if the value of the assets is below a certain monetary amount and /or the decedent did not own real property in the State of California.

Estate Taxes:

The value of the assets of your estate and how you decide to distribute them could trigger certain tax consequences.

With the assistance of a knowledgeable and experienced estate planning attorney, you can avoid the lengthy and often expensive probate process and the potential for unnecessary tax liabilities.